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dc.contributor.authorLemoine, Derek
dc.contributor.authorTraeger, Christian P.
dc.date.accessioned2017-02-24T19:59:50Z
dc.date.available2017-02-24T19:59:50Z
dc.date.issued2016-12
dc.identifier.citationAmbiguous tipping points 2016, 132:5 Journal of Economic Behavior & Organizationen
dc.identifier.issn01672681
dc.identifier.doi10.1016/j.jebo.2016.03.009
dc.identifier.urihttp://hdl.handle.net/10150/622659
dc.description.abstractWe analyze the policy implications of aversion to Knightian uncertainty (ambiguity) about the possibility of tipping points. We demonstrate two channels through which uncertainty aversion affects optimal policy in the general setting. The first channel relates to the policy's effect on the probability of tipping, and the second channel to its differential impact in the pre- and post-tipping regimes. We then extend a recursive dynamic model of climate policy and tipping points to include uncertainty aversion. Numerically, aversion to Knightian uncertainty in the face of an ambiguous tipping point increases the optimal tax on carbon dioxide emissions, but only by a small amount.
dc.description.sponsorshipNational Science Foundation through the Network for Sustainable Climate Risk Management [GEO-1240507]en
dc.language.isoenen
dc.publisherELSEVIER SCIENCE BVen
dc.relation.urlhttp://linkinghub.elsevier.com/retrieve/pii/S0167268116300221en
dc.rights© 2016 Elsevier B.V. All rights reserved.en
dc.subjectTipping pointen
dc.subjectAmbiguityen
dc.subjectKnightian uncertaintyen
dc.subjectThresholden
dc.subjectRegime shiften
dc.subjectClimateen
dc.subjectHazarden
dc.subjectIntegrated assessment;en
dc.subjectDynamic programmingen
dc.subjectSocial cost of carbonen
dc.subjectCarbon taxen
dc.titleAmbiguous tipping pointsen
dc.typeArticleen
dc.contributor.departmentDepartment of Economics, University of Arizonaen
dc.identifier.journalJournal of Economic Behavior & Organizationen
dc.description.note36 month embargo; Available online 28 March 2016en
dc.description.collectioninformationThis item from the UA Faculty Publications collection is made available by the University of Arizona with support from the University of Arizona Libraries. If you have questions, please contact us at repository@u.library.arizona.edu.en
dc.eprint.versionFinal accepted manuscripten
html.description.abstractWe analyze the policy implications of aversion to Knightian uncertainty (ambiguity) about the possibility of tipping points. We demonstrate two channels through which uncertainty aversion affects optimal policy in the general setting. The first channel relates to the policy's effect on the probability of tipping, and the second channel to its differential impact in the pre- and post-tipping regimes. We then extend a recursive dynamic model of climate policy and tipping points to include uncertainty aversion. Numerically, aversion to Knightian uncertainty in the face of an ambiguous tipping point increases the optimal tax on carbon dioxide emissions, but only by a small amount.


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